A Study On Ipo Issue Documents And Their Past Listing Performance.

PROJECT ON

A STUDY ON IPO ISSUE DOCUMENTS AND THEIR PAST LISTING PERFORMANCE. PROJECT SUBMITTED TO ANNAMALAI UNIVERSITY, IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION IN APPLIED MANAGEMENT By

Name: - Dinesh Soni Enrollment No: - 4740700464 Name of the Guide: - Mr. Praveen Mehta

DIRECTORATE OF DISTANCE EDUCATION ANNAMALAI NAGAR 2008

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DECLARATION

I hereby declare that the project entitled “A STUDY ON IPO ISSUE DOCUMENTS AND THEIR PAST LISTING PERFORMANCE. ” submitted for the Degree of Master of Business Administration in Applied Management is my original work and the project has not formed the basis for the award of any degree, diploma, associate ship, fellowship or similar other titles. It has not been submitted to any other university or Institution for the award of any degree or diploma.

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ACKNOWLEDGEMENT

It is with real pleasure that, I record my indebtedness to my academic Guide, Mr. Praveen Mehta for his counsel and guidance during the preparation of this project. I am grateful to Centre Head Mr. Praveen Mehta I wish to record my sincere and special thanks to Mr. Amit Sharma, My thanks are due to Mr. Manish Goyal and Mr. Bharat Kuldeep to give me great and valuable support.

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CERTIFICATE

Certified that the project is a work done by Mr. Dinesh Soni during the period of his study under my guidance, and that the project has not previously formed the basis for the award of any degree, diploma, associates hip, fellowship or similar other titles and that it is an independent work done by his.

Place:

Name: Mr. Praveen Mehta

Date:

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TABLE OF CONTENT Chapter

Content

Page No.

Acknowledgement

III

List of Tables

VII

List of Diagrams

VIII

(1)

Introduction 1.1

09-42

Initial public offering (IPO) 10-23

1.2

•

What is IPO?

10-12

•

Reasons for Listing

13-15

•

IPO Market in india

16-17

•

IPO Allotment Status

18-19

•

IPO Procedure

20-23

Objectives and Role of IPO in india

1.3 Review of Literature

24-25 26-30

•

Advantages & Drawbacks of IPO

26-29

•

Example of Some Published Issue’s

30

1.4 Hypothesis

31-38

•

Past/ Present/ Future of IPO

31-34

•

What are the Critical Areas to Focus

35-38

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1.5

Limitations of the Study 39-40

1.6 Methodology

(2)

•

Source of Data

41

•

Other Source

42

Significance of the study 2.1 Global IPO Market 2.2

(3)

41-42

Upcoming IPO in The Market

Research and Analysis 3.1

Latest News in IPO Sector

3.2

Major Player of IPO in India 59-71

43-54 44-51 52-54

55-71 56-58

(4) Finding & Conclusion

72-74

(5) Bibliography

75-76

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Table No. Page No.

Title of the Table

1.1.

Middle East Activity Table

1.2.

Industrial Distribution

48 50 1.3.

No.IPO of NSE in India

58

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Table No.

Title of the Diagram

Page

No.

1.1.

Different Kind of Issue

11

1.2.

How To Listing An IPO

13

1.3.

IPO Process

1.4

.

Book Building Process

1.5

.

IPO Returns

15

23 40 1.6.

Global IPO Activity

44

1.7.

Global IPO Activity by Indust.

46

1.8.

Top Ten IPO in US

51

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Chapter (1)

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Part-1.1 

INITIAL PUBLIC OFFERING (IPO) Initial public offering (IPO), also referred to simply as a "public offering", is when a company issues common stock or shares to the public for the first time. They are often issued by smaller,

younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded. In an IPO, the issuer may obtain the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), best offering price and time to bring it to market.Initial Public Offering (IPO) in India means the selling of the shares of a company, for the first time, to the public in the country's capital markets. This is done by giving to the public, shares that are either owned by the promoters of the company or by issuing new shares. During an Initial Public Offer (IPO) the shares are given to the public at a discount on the intrinsic value of the shares and this is the reason that the investors buy shares during the Initial Public Offering (IPO) in order to make profits for them selves. IPO in India is done through various methods like book building method, fixed price method, or a mixture of both. The method of book building has been introduced in the country in 1999 and it helps the company to find out

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the demand and price of its shares. A merchant banker is nominated as a book runner by the Issuer of the IPO. The company that is issuing the Initial Public Offering (IPO) decides the number of shares that it will issue and also fixes the price band of the shares. All these information are mentioned in the company's red herring prospectus. During the company's Initial Public Offering (IPO) in India, an electronic book is opened for at least five days. During this period of time, bidding takes place which means that people who are interested in buying the shares of the

Company makes an offer within the fixed price band. Once the book building is closed then the issuer as well as the book runner of the Initial Public Offering (IPO) evaluate the offers and then determine a fixed price. The offers for shares that fall below the fixed price are rejected. The successful bidders are then allotted the shares

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IPO’s can be a risky investment. For the individual investor, it is tough to predict what the stock or shares will do on its initial day of trading and in the near future since there is often little historical data with which to analyze the company. Also, most IPO’s are of companies going through a transitory growth period, and they are therefore subject to additional uncertainty regarding their future value

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REASONS FOR LISTING When a company lists its shares on a public exchange, it will almost invariably look to issue additional new shares in order to raise extra capital at the same time. The money paid by investors for the newly-issued shares goes directly to the company (in contrast to a later trade of shares on the exchange, where the money passes between investors). An IPO, therefore, allows a company to tap a wide pool of stock market investors to provide it with large volumes of capital for future growth. The company is never required to repay the capital, but instead the new shareholders have a right to future profits distributed by the company and the right to a capital distribution in case of a dissolution.

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The existing shareholders will see their shareholdings diluted as a proportion of the company's shares. However, they hope that the capital investment will make their shareholdings more valuable in absolute terms. In addition, once a company is listed, it will be able to issue further shares via a rights issue, thereby again providing itself with capital for expansion without incurring any debt. This regular ability to raise large amounts of capital from the general market, rather than having to seek and negotiate with individual investors, is a key incentive for many companies seeking to list.

Major Reason for Listing IPO  The increase in the capital: An IPO allows a company to raise funds for

utilizing in various corporate operational purposes like acquisitions, mergers, working capital, research and development, expanding plant and equipment and marketing.

 Liquidity: The shares once traded have an assigned market value and can be

resold. This is extremely helpful as the company provides the employees with stock incentive packages and the investors are provided with the option of trading their shares for a price.

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 Valuation: The public trading of the shares determines a value for the

company and sets a standard. This works in favor of the company as it is helpful in case the company is looking for acquisition or merger. It also provides the share holders of the company with the present value of the shares.

 Increased wealth: The founders of the companies have an affinity towards

IPO as it can increase the wealth of the company, without dividing the authority as in case of partnership.

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IPO MARKET IN INDIA The IPO Market in India has been developing since the liberalization of the Indian economy. It has become one of the foremost methods of raising funds for various developmental projects of different companies. The IPO Market in India is on the boom as more and more companies are issuing equity shares in the capital market. With the introduction of the open market economy, in the 1990s, the IPO Market went through its share of policy changes, reforms and restructurings. One of the most important developments was the disassembling of the Controller of Capital Issues (CCI) and the introduction of the free pricing mechanism. This step helped in developing the IPO Market in India, as the companies were permitted to price the issues. The Free pricing mechanism permitted the companies to raise funds from the primary market at competitive price. The Central Government felt the need for a governed environment pertaining to the Capital market, as few corporate houses were using the abolition of the Controller of Capital Issues (CCI) in a negative manner. The Securities Exchange Board of India (SEBI) was established in the year 1992 to regulate the capital market. SEBI was given the authority of monitoring and regulating the activities of the bankers to an issue, portfolio managers, stockbrokers, and other intermediaries related to the stock markets. The effects of the changes are

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evident from the trend of the resources of the primary capital market which includes rights issues, public issues, private placements and overseas issues. The IPO Market in India experienced a boom in its activities in the year 1994. In the year 1995 the growth of the Indian IPO market was 32 %. The growth was halted with the South East Asian crisis. The markets picked up speed again with the introduction of the software stocks.

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IPO ALLOTMENT STATUS Initial public offering is also popularly known as IPO, is the first time sale of stocks, of a private company. A new company can launch IPO to raise capital to initiate its business. Moreover, Initial Public Offering can also be launched to raise money for expansion or other important operations of an existing company. The sale of stock through such Initial Public Offering (IPO) is meant for the individual and corporate investors. The aim of such issuance of Initial Public Offering is to invest the accumulated corpus for, either opening -up of a company or expansion of an existing company. Thus, effectively, an Initial Public Offering pools investments and utilizes it in building or expansion of the said company. The shares held by such investors give them the rights of the company and to its future profits. The process which involves determination of the issue size and type, offer price and best time of introduction into the market is called "underwriting". The underwriting is generally done by the investment bankers. These underwriting firms or investment bankers are allotted some specified numbers of shares to sell, which is called as IPO Allotment Status. In other words, IPO Allotment Status can also be defined as the number of stocks which an investment banker is permitted to sell to the general investor before the share is being traded on an exchange. The excess shares are then allotted to other investment bankers which are eligible to sell such shares. In

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India, the main governing body that determines such eligibility criteria and the IPO Allotment Status is the Securities and Exchange Board of India (SEBI).

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IPO - PROCEDURE IPO’s generally involve one or more investment banks as "underwriters." The company offering its shares, called the "issuer," enters a contract with a lead underwriter to sell its shares to the public. The underwriter then approaches investors with offers to sell these shares. The sale (that is, the allocation and pricing) of shares in an IPO may take several forms. Common methods include: • Best efforts contract • Firm commitment contract • All-or-none contract • Bought deal • Dutch auction • Self distribution of stock A large IPO is usually underwritten by a "syndicate" of investment banks led by one or more major investment banks (lead underwriter). Upon selling the shares, the underwriters keep a commission based on a percentage of the value of the shares sold. Usually, the lead underwriters, i.e. the underwriters selling the largest proportions of the IPO, take the highest commissions—up to 8% in some cases. Multinational IPOs may have as many as three syndicates to deal with differing legal requirements in both the issuer's domestic market and other regions. For

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example, an issuer based in the E.U. may be represented by the main selling syndicate in its domestic market, Europe, in addition to separate syndicates or selling groups for US/Canada and for Asia. Usually, the lead underwriter in the main selling group is also the lead bank in the other selling groups. Because of the wide array of legal requirements, IPOs typically involve one or more law firms with major practices in securities law, such as the Magic Circle firms of London and the white shoe firms of New York City. Usually, the offering will include the issuance of new shares, intended to raise new capital, as well the secondary sale of existing shares. However, certain regulatory restrictions and restrictions imposed by the lead underwriter are often placed on the sale of existing shares. Public offerings are primarily sold to institutional investors, but some shares are also allocated to the underwriters' retail investors. A broker selling shares of a public offering to his clients is paid through a sales credit instead of a commission. The client pays no commission to purchase the shares of a public offering; the purchase price simply includes the built-in sales credit. The issuer usually allows the underwriters an option to increase the size of the offering by up to 15% under certain circumstance known as the green shoe or over allotment option. The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded. In

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an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering

MAJOR PROCESS OF AN IPO



Eligibility Criteria: • Net Tangible assets of Rs. 3.00 Crore in each of the preceding 3 years. • Track record of Distributable profits at least 3 out of 5 preceding years. • The Company has a Networth of Rs. 1.00 Crore in preceding 3 years. • The proposed issue should not exceed 5 times of its Pre-issue

 The process of an IPO - Eligibility criteria: (Alternate route) •

Book building process and 50% of the offer to QIBs or

• 15% participation in project by F/Is or Schedule Banks; • 10% of the Project cost from appraiser; • 10% of the Issue to QIBs. • Minimum post issue face capital of Rs.10 Crores or • Market making for 2 years and Minimum number of allottees atleast 1000

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 Official Process of IPO • Appointment of Brokers, Advertisers and Bankers • Conducting Road shows and Press Conference • Opening and closing of Subscription list • Preparation of Basis of Allotment • Allotment of shares • Listing of shares • price and the time to bring it to market

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Part 1.2 

OBJECTIVES AND ROLE OF IPO

 To get the knowledge of IPO.  To analyze the returns of IPO’s which were issued in the 1st quarter of 2007.  To know the return of those IPO’s for 1 month, 3 months, 6 months, and 1 year.  To know the market rate of return for the same period.  To know the procedure for calculating the Standard Deviation, calculating Sharpe’s Ratio & the abnormal return.  Spread awareness about this process.  Find out the companies which like to adopt this technique.  Find out the factors which influence the IPO Listing Process.  What the companies are looking from Open New IPO’s in India?  Analysis between Share Holder and IPO Companies  Analysis of IPO’s post/present/future Prospects  Analysis of Auction, Pricing, Issued Price and Reverse IPO’s.

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OBJECTS OF THE OFFERING NEW IPO  Funds Requirement  Funding Plan (Means of Finance)  Appraisal  Schedule of Implementation  Funds Deployed  Sources of Financing of Funds already deployed  Details of Balance Fund Requirement  Interim Use of Funds  Basic Terms of Issue  Basis for issue price  Tax Benefits

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Part 1.3 ADVANTAGES & DRAWBACKS OF IPO The Advantages of IPO are numerous. The companies are launching more and more IPO’s to raise funds which are utilized for undertakings various projects including expansion plans. The Advantages of IPO is the primary factor for the immense growth of the same in the last few years. The IPO or the initial public offering is a term used to describe the first sale of the shares to the public by any company. All types of companies with the idea of enhancing growth launch IPOs to generate funds to cater the requirements of capital for expansion, acquiring of capital instruments, undertaking new projects.

Major Advantages of IPO IPO has a number of advantages. IPO helps the company to create a publi c awareness about the company as these public offerings generate publicity by inducing their products to various investors.  The increase in the capital: An IPO allows a company to raise funds for

utilizing in various corporate operational purposes like acquisitions, mergers, working capital, research and development, expanding plant and equipment and marketing.  Liquidity: The shares once traded have an assigned market value and can

be resold. This is extremely helpful as the company provides the

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employees with stock incentive packages and the investors are provided with the option of trading their shares for a price.  Valuation: The public trading of the shares determines a value for the

company and sets a standard. This works in favor of the company as it is helpful in case the company is looking for acquisition or merger. It also provides the share holders of the company with the present value of the shares.  Increased wealth: The founders of the companies have an affinity towards

IPO as it can increase the wealth of the company, without dividing the authority as in case of partnership.

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Drawbacks of IPO’s It is true that IPO raises huge capital for the issuing company. But, in order to launch an Initial Public Offering (IPO), it is also necessary to make certain investments. Setting up an IPO does not always lead to an improvement in the economic performance of the company. A continuing expenditure has to be incurred after the setting up of an IPO by the parent company. A lot of expenses have to be incurred in the form of legal fees, printing costs and accounting fees, which are connected to the registering of an IPO. Such expenses might cost hundreds of US dollars. Apart from such enormous costs, there are other factors as well that should be taken into consideration by the company while introducing an IPO. Such factors include the rules and regulations involved to set up public offerings and this entire process on the other hand involve a number of complexities which sometime require the services of experts in relevant fields. Some companies hire experts to do the needful to ensure a hassle-free execution of the task. After the IPO is introduced, the expenses become a routine in every activity involved. Besides, the CEO of the company would have to spend a lot of time in handling the SEC regulations or sometimes he hires experts to do the same. All these aspects, if not handled with efficiency, prove to be some major drawbacks related to the launch of IPOs. The launch of IPO also brings about shareholders of the company. Shareholders have ownership in the company. The primary owners of the company or the

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people holding maximum authority in the company cannot take decisions all by themselves once an IPO has been launched and shareholders have been formed. The shareholders have an active participation in every decision that is being taken even if they do not hold 50 percent share of the company. They have their individual demands to be met as they own a certain percentage of stakes in the company. The SEC regulations require notifications from the shareholders of the company, meetings, and also approvals from them while making important business decisions. A major risk with shareholders is that, they can sell off their stocks any time they want, in case they see the price band of the stakes of that company is going down. This will lead to a further drop of the value of shares in the market which in turn will decrease the overall value of the company.

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 EXAMPLE OF SOME PUBLISHED ISSUE’S  Indian Bank IPO on the anvil-India Business-Business-The Times of India

 India is world's 8th largest IPO market- The Times of India

 India Inc's fund raising via IPO in 2008 dips to 3-yr low- The Economic

Time

 IPO market to boom in second half- The Economic Time

 India Inc raises over Rs 45,000 cr in IPOs, follow-ons in 2007- The Hindu

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Part 1.4 PAST/ PRESENT/ FUTURE OF IPO India’s rapid economic growth, robust corporate profit stability, and a fouryear bull run on Bombay’s Stock Exchange (BSE), continue to fuel India’s strong IPO markets. “Keen investor interest in India’s strong growth story has been real acted in the attractive valuations and key price/earnings multiples garnered by Indian companies,” says R. Balanchine, IPO Leader, Strategic Growth Markets, Ernst & Young India. In 2006, India’s markets launched 78 IPO’s and raised US$7.23 billion. Currently, India’s exchanges rank eighth in the world for numbers of IPO’s and value in 2006. Despite a May 2006 market tumble that erased more than US$100 billion in value in the BSE and sparked concerns that the four-year Indian stock rally was over, Indian IPO activity quickly resumed its upward momentum. In 2006, India’s IPO market has been fairly broad-based, although energy companies dominated with more than 50% share of funds raised. In 2006, India’s largest IPO was petroleum rife nine company, Reliance Petroleum, which raised US$1.8 billion, followed by the oil production and exploration company, Cairn Energy, which raised US$1.3 billion. Real estate IPO’s also generated stellar returns for investors.

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In the United States, during the dot-com bubble of the late 1990s, many venture capital driven companies were started, and seeking to cash in on the bull market, quickly offered IPO’s. Usually, stock price spiraled upwards as soon as a company went public. Investors sought to get in at the ground-level of the next potential Microsoft and Netscape. Initial founders could often become overnight millionaires, and due to generous stock options, employees could make a great deal of money as well. The majority of IPOs could be found on the NASDAQ stock exchange, which lists companies related to computer and information technology. However, in spite of the large amounts of financial resources made available to relatively young and untested firms (often in multiple rounds of financing), the vast majority of them rapidly entered cash crisis. Crisis was particularly likely in the case of firms where the founding team liquidated a substantial portion of their stake in the firm at or soon after the IPO (Mudambi and Treichel, 2005). This phenomenon was not limited to the United States. In Japan, for example, a similar situation occurred. Some companies were operated in a similar way in that their only goal was to have an IPO. Some stock exchanges were set up for those companies, such as Osaka Securities Exchange. Perhaps the clearest bubbles in the history of hot IPO markets were in 1929, when closed-end fund IPOs sold at enormous premiums to net asset value, and in 1989, when closed-end country fund IPOs sold at enormous premiums to net asset value. What makes these bubbles so clear is the ability to compare market

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prices for shares in the closed-end funds to the value of the shares in the funds' portfolios. When market prices are multiples of the underlying value, bubbles are likely to be occurring.

A Brief Note on Future of IPOs in India The IPO industry in India has received a major boost in the current year especially with the emergence of Reliance Power IPO on 15th January 2008. Apart from Reliance Power, another IPO which brought in major capital is Kishore Biyani-led Future Group's financial services arm. This IPO has been a recipient of 17.36 crores equity shares as bidding as compared to 6,422,000 equity shares on offer. The public offerings of the IPO of Kishore Biyani-led Future Group's financial services arm are estimated to rise around Rs. 490 crores future capital. The price range fixed for the Equity shares of this IPO varies between Rs. 700 to Rs. 765. The subscription for the issue of this IPO was opened from 11th January 2008 to 16th January 2008. Future of IPOs in India is quite bright as the Future Capital Holdings in India are expected to rise up to USD 124 million by the end of 2008. Future Capital, the financial services arm of the diversified Future Group is expected to divest around 10.16 percent of its capital which accounts for around 6.4 million shares in the IPO market. In the year 2007, the IPO market in India has been estimated to raise USD 8.2 billion from 88 IPOs as compared to USD 4.7 billion in the previous year. It contributed largely in the growth of stock market which rose by 47 percent.

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Assuming a major hike in the Indian IPOs, the government has confirmed the opening of the Oil India IPO by March 2008. The IPO of Oil India Limited has been reported to raise Rs.1500 crores and will hit the capital market in March 2008.

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

WHAT ARE THE CRITICAL AREAS TO FOCUS

 Compliance with SEBI Guidelines  90% subscription of the issue  Underwriting Agreements  Firm Allotments  Listing approvals from the Stock Exchanges  ROC approval for the prospectus  Advertising and Road Shows  Statutory advertisements  In-time allotments and refunds  Listing of the shares with the Exchanges

SEBI GUIDELINES  Filing of prospectus: Prospectus to be filed with SEBI through Merchant Banker At least 30 days < filing with ROC SEBI may suggest changes < 30 days SEBI to consider only after approval from St.Ex • Issuer is obligated • SEBI is not obligated

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 Application for Listing: No IPO without application for listing

 Dematerialization of shares: Agreement with Depository Present shares also to be in demat public may opt either physical or demat shares

 “Qualified Institutional Buyer” shall mean: •

Public financial institution as defined in section 4A of the Companies Act, 1956; scheduled commercial banks;

•

Mutual funds;

•

Foreign institutional investor registered with SEBI;

•

Multilateral and bilateral development financial institutions;

•

Venture capital funds registered with SEBI;

• Foreign venture capital investors registered with SEBI; • State industrial development corporations; • Insurance companies registered with the Insurance Regulatory and Development Authority (IRDA); • Provident funds with minimum corpus of Rs. 25 crores; • Pension funds with minimum corpus of Rs. 25 crores).

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 Exemption from Eligibility Norms: • Banking Co. including Pvt. Banks Subject to licensing by RBI • New Bank being set up on acquisition or take over of a bank • An infrastructure Company, whose project is appraised by F/I, IL & FS and IDFC

 IPO Grading: • No IPO unless; (as on the date of filing the prospectus with ROC): • Grading for IPO has been obtained from at least one agency • Grading and the rationale have been included in the prospectus • Grading expenses to be borne by the issuer



Present shares to be fully paid-up:

• No IPO, if there are any shares partly paid up as on the date of IPO • The Shares to be fully paid up or forfeited



Price Band:

• Price Band to be 20% • Max price can be 20% above the floor price

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• Board of directors may be authorized to fix the price

 Denomination of shares • Denomination of the shares is not restricted • In case the issue price is
 Guidelines on issue of advertisement: • Advertisement shall be truthful, fair and clear • Shall not contain untrue or misleading or misleading statement • Disclose all relevant facts • Clear, concise and • Understandable language • Avoid technical, legal, complex terms • No advertisement in Crawlers • Reference to the red-herring prospectus • No slogans, captions or one liners • Shall include risk factors • Risk factors to be given in the same font size Page No. 39

• The print size shall not be less than point size 7

Part 1.5 More often than not, the pricing of any IPO is what influences the decision of any investor. The rating agencies, in this case, will not talk about ``what price'' and ``what time'' aspects of the offer. Given that the decision to invest or avoid investments in any IPO is most often a function of the pricing, the lack of this aspect in the present IPO grading system could make the whole process an unfinished task. Also, rating agencies (experienced in debt rating) could face trouble with rating the equities, which, unlike debt rating, is more dynamic and cannot be standardized. Further, IPO grading mechanism is a globally-unique initiative; it could increase the cost of raising capital in India and urge companies to seek capital overseas. Markets, in the short term, can be price-driven and not purely motivated by company fundamentals. That is to say that, at times, even good companies at a higher price could be a bad investment choice, while the not-as-good ones could be a steal at lower prices.

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Despite having disclaimers, a higher graded IPO may well tempt small investors into falsely believing that a high premium would come about on listing. Similarly, investors may get deluded by a low-graded IPO, which could become a `missed opportunity' in the future. The purpose of introducing grading, thus, might get defeated if it leads to a false sense of buoyancy or alarm among investors. Till such time the utility of the IPO grading system is unraveled, it is advisable for investors to use the grades only as an additional input to make an informed decision. Investors need to be convinced about the business potential, pricing and valuations of an IPO, together with the grading, to make a final choice.

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Part 1.6  SOURCE OF DATA Data’s are the useful information or any forms of document designed in a systematic and standardize manner which are used for some further proceedings. One of the important tools for conducting marketing research is the availability of necessary and useful data. Some time the data are available readily in one form or the other and some time the data are collected afresh. The sources of Data fall under two categories, Primary Source and Secondary Sources.

Primary Data-

the primary data was collected through the following

activities: Filled the IPO Industry related questionnaire to managers of a select group of companies And Paper Conversation

Secondary Data- the secondary data was collected through the following: Online Research material of the Various Financial Institution directly or indirectly involved with IPO, Secondary Data used in External Source of Information Like internet, magazine, paper cutting.

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 OTHER SOURCE  Information Sources Information has been sourced from namely, books, newspapers, trade journals, and white papers, industry portals, government agencies, trade associations, monitoring industry news and developments, and through access to access to more than 3000 paid databases.

 Analysis Method The analysis methods include the following: Ratio Analysis, Historical Trend Analysis, Linear Regression Analysis using software tools, Judgmental Forecasting and Cause and Effect Analysis etc.

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Chapter (2)

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Part 2.1 

GLOBAL IPO MARKET Accelerated globalization of capital continues to drive the record-setting

world IPO markets of 2006–2007. Around the world, companies, investors, and stock exchanges think and act much more globally, often looking outside domestic markets for high

growth

opportunities.

In

the

past 18 months, key IPO trends refl ect the effects of globalization: flourishing

stock

markets awash in liquidity, vibrant growth in the emerging markets, escalating rivalry between the world’s stock exchanges, the rise of more world-class financial centers, the boom in large listings on local exchanges, and the proliferation of capital-raising options, especially private equity’s emergence as a key player behind so many large IPO’s. In 2007, globalizing capital and a surge in IPO ready companies worldwide are broadening the horizons of the world’s financial markets

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GREATER CHINA KEY TRENDS: • Greater China’s IPO markets launched mega–IPOs in 2006, with larger (but no longer super-sized) IPO’s in 2007. • HKSE led world exchanges in fundraising in 2006, and showcasing its world-class liquidity and corporate governance standards. • As global resources migrate to China, foreign investors grow more comfortable investing locally, especially in state-owned enterprises. • A dual-listing trend and budding rivalry emerges for the Hong Kong and Shanghai stock exchanges. • Many large Chinese companies offer shares to US institutional investors under Rule 144A. Driven by yet another year of rapid economic growth and robust secondary markets in 2006, Greater China’s IPO market soared to an all-time high, with US$56.6 billion raised in 175 offerings. With conspicuous success, the Hong Kong Stock Exchange (HKSE) hosted privatizations of China’s two largest state-owned banks — including the world’s largest IPO ever, the Industrial and Commercial Bank of China (ICBC) with US$21.9 billion raised, and the second largest offering, Bank of China (BOC) which raised US$11 billion. The ICBC issuance was also the first time in China that shares were dual-listed.

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INDIA KEY TRENDS: •

The strength of India’s economy, stock market, corporate profits, energy sector, and private equity fuel IPO’s in 2006 and 2007.

•

Indian exchanges hosted several billion-dollar IPO’s in 2006, all prime examples of the rise in localization.

• Cross border activity and the role of foreign capital continue to grow. •

Enabling relatively easy access to global institutional capital, Qualified Institutional Placements (QIPs) gain immediate popularity.

•

The private equity rush into India has lead to a potential for many IPO exits.

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EUROPE KEY TRENDS: •

Europe’s IPO markets rose to an all-time high in 2006, and remain high-fl years in

•

2007 bolstered by beefy deals, cross-border listings in London, and private equity.

• As the region’s high-growth story, Russia drives European IPO activity. •

London has become the top listings destination for cross-border issuers seeking relatively quick and easy capital.

•

Europe’s junior exchanges, including London’s AIM, the Eurocent’s AlterNet, and Deutsche Brose’s Entry Standard, are thriving with smallcap activity.

•

The ballooning growth in European private equity is leading to more IPO exits, and sizeable public-to-private transactions.

Europe’s steady economic expansion, attractive stock prices relative to US peers, low interest rates, and vigorous secondary stock markets galvanized its IPO markets in 2006 and 2007. For the second year in a row, Europe’s exchanges attracted the most cross-border listings, especially Russian companies listing in London. Another key source of capital in Europe has been the large private equity firms.

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MIDDLE EAST KEY TRENDS: •

After three years of record growth, most Middle East markets endured erratic performance in 2006, but seem to be steadier in 2007.

•

Factors leading to Middle East volatility include excess liquidity, irrational retail speculation and lack of market depth.

•

The Middle East IPO pipeline is expected to expand, with large-scale privatizations and infrastructural projects in the works.

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CIS/RUSSIA KEY TRENDS: •

Russian IPO markets fl ourish in 2006 and 2007, particularly in the commodities and fi nancial services sectors.

•

Larger Russian companies seek credibility and deeper liquidity by listing in London.

•

Russian companies face uncertainty ahead with 2008 presidential elections, commodity prices, and corporate governance issues.

•

A GDR in London combined with a US Rule 144A offering is the most popular form of listing.

•

As the private equity market remains undeveloped, IPOs are by far the most popular Russian exit strategy, with the best valuations.

•

Kazakhstan launches large IPOs in resources and banking sectors with several major banks expected to go public in 2007.

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AUSTRALIA KEY TRENDS: •

Rising commodity prices and demand from Asia fuel thriving resources and energy sectors.

•

A recent surge in private equity will lead to many IPO exits in next 12–24 months.

As Australian stock markets rise for the fourth year in a row, Australia’s stable economy, record corporate profi ts and booming resources sector have led to an extraordinarily active IPO market. In 2006, Australia launched 173 IPOs, raising US$4.2 billion, with many listings in the resources and energy sector. The largest Australian IPO of 2006 was explosives maker Dyno Nobel worth US$800 million.

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UNITED STATES KEY TRENDS: •

Robust US markets garner the highest number of IPOs in 2006 and maintain momentum with a pipeline of high-quality deals in 2007.

•

Most global companies list at home, rather than in the US, as local markets grow more liquid and better regulated.

In the past 18 months, the vitality of the US stock market has whet investor appetite for risk, and spurred US-domiciled IPO numbers to record heights. Although some market watchers blame US regulations for the rise in non-US cross-border issuances, globalization of capital may be the primary force behind the trend as it has lead to stronger, more liquid, competitive markets worldwide. For a truly global company, a US listing is still seen as the “gold standard” with access to the deepest pool of capital, a valuation premium, and strategic advantages.

Part 2.2 Page No. 52

UPCOMING IPO IN THE MARKET Upcoming Initial Public Offering (IPOs) in India at a glance: Initial Public Offer (IPO) in India, means the first sale by a private company of its shares to the public. Initial Public Offers (IPOs) in India, are usually issued by small companies but at the same time big private companies also go public by issuing their shares. The Upcoming IPOs in India are being issued by those private companies that want to sell their shares in the country's capital markets. Many companies are planning to launch their IPOs in the financial year 2009-2009.

Various companies issuing upcoming IPOs in India as on 3rd December, 2008 are: •

UTI Asset Management Company Ltd whose lead manager is Sbicap Securities Ltd.

•

Madhana Industries Ltd whose lead manager is Edelweiss Securities Ltd.

•

Pipavav Shipyard Ltd whose lead manager is Citigroup Global Markets India Pvt. Ltd.

•

Mahindra Holidays & Resorts India Ltd whose lead manager is HSBC Securities And Capital Markets India Pvt. Ltd.

•

Gammon Infrastructure Projects Ltd whose lead manager is Sharekhan Ltd.

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•

Resurgere Mines & Minerals India Ltd whose lead manager is Motilal Oswal Securities Ltd.

•

National Hydroelectric Power Corporation Ltd whose lead manager is Enam Securities Pvt. Ltd.

•

Kiridyes and Chemicals Ltd whose lead manager is Centrum Capital Ltd.

•

Neel Metal Products Ltd whose lead manager is ICICI Securities Ltd.

•

Jhaveri Flexo India Ltd whose lead manager is SREI Capital Markets Ltd.

•

Gokul Refoils And Solvent Ltd whose lead manager is Intensive Fiscal Services Pvt. Ltd.

•

Pride Hotels Ltd. whose lead manager is Edelweiss Securities Ltd.

•

Oil India Ltd. whose lead manager is Citigroup Global Markets India Pvt, Ltd.

•

Man Infraconstruction Ltd. whose lead manager is Kotak Mahindra Capital Company Ltd.

•

Oswal Wollen Mills Ltd. whose lead manager is UTI Bank Ltd.

•

TCG Lifesciences whose lead manager is Enam Securities Pvt. Ltd.

•

Uma Precision Ltd. whose lead manager is Karvy Stock Broking Ltd.

•

Future Ventures India Ltd. whose lead manager is Enam Securities Ltd.

•

Alkali Metals Ltd. whose lead manager is Religare Securities Ltd.

•

Multi Commodity Exchange India Ltd. whose lead manager is JM Morgan Stanley Financial Services Pvt. Ltd.

•

Cox & Kings (India) Ltd. whose lead manager is Enam Securities Ltd.

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•

Jaiprakash Power Ventures Ltd whose lead manager is Enam Securities Ltd.

•

Aishwarya Telecom Ltd. whose lead manager is SREI Capital Markets Ltd.

•

ACME Tele Power Ltd. whose lead manager is Kotak Securities Ltd.

•

RNS Infrastructure Ltd. whose lead manager is ICICI Securities Ltd.

•

Midvalley Entertainment Ltd. whose lead manager is Religare Securities Ltd.

•

Ramsarup Lohh Udyog Ltd. whose lead manager is Microsec Capital Ltd.

•

Edserv Soft at 20% lower circuit, witnesses 45 bulk deals

•

Bharat Oman Refineries defers IPO

•

Edserv witnesses 188 bulk deals, India Max sells 4 lk shrs

•

Edserv IPO: Will 50% allotment to QIBs affect stock ahead?

•

See FY09, FY10 EPS at Rs 15/sh: Edserv Softsystems

•

EdServ Softsystems ends with 129% premium

•

EdServ Softsystems lists at issue price of Rs 60

•

EdServ Softsystems to list on March 2

•

Crisil finds weak corporate governance structure in IPO cos

•

BSNL\'s IPO plans still on cards: Scindia

•

ING Vysya pays Rs 4 lakh to settle IPO case

Chapter (3) Page No. 55

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Part 3.1 LATEST NEWS IN IPO SECTOR The IPO market in India has been growing at a massive pace for the past few years. With the advent of some leading IPOs in India, the country has become the largest IPO market across the globe so far. India has saved almost USD 3.3 billion proceeds in the global IPO market from eight deals of late. As has been estimated by Thomson Financial, the biggest contributor to these deals has been the USD 3 billion IPO of Reliance Power. The second largest IPO in India is Emaar MGF which is a USD 1.6 billion IPO. Emaar MGF has revised the price range for the Equity shares. Initially it was Rs 540-630 per share which now costs Rs 530-630 per share. A report by Thomson Financial states that India has occupied 49.1 percent of the global IPO proceeds in the current year 2008 as compared to 3.7 percent in the year 2007. The global IPO market has deteriorated by 36.1 percent during the past one year.



HCC defers plans to launch IPO of Lavasa Corporation

Construction major HCC's group company Lavasa Corporation, which is developing an ambitious Rs 30,000-crore hill city project here, has deferred its plan to launch an initial public offer due to global economic slowdown.

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 Bharat Oman Refineries defers plans to raise funds through IPO The Bharat Petroleum Corporation-promoted Bharat Oman Refineries has deferred its earlier plans to raise funds through an initial public offer, due to adverse market conditions.

 ONGC mulls IPO for Rs 12,440 cr plant, gives 19% stake to GAIL ONGC is planning an initial public offering of its subsidiary, which is building Rs 12,440 crore petrochemical plant at Dahej in 2011, even as it agreed to give state gas utility GAIL India a 19 per cent stake in the mega project.



Tata Cap issue over subscribed 6 times; huge investor response

Public issue of Tata Group firm Tata Capital got subscribed over six times of the offer, receiving bids worth over Rs 3,000 crore, driven by robust response from all categories of investors.



Governance’s weak in 50% of IPOs: Crisil

Corporate governance standards were ‘weak’ in almost 50% of the 29 initial public offerings (IPOs) graded by Crisil since May 2007, the rating agency said in a release on Thursday.



Corporate governance may weigh more in future IPO gradings

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Ratings agencies are likely to increasingly look at corporate governance as a key aspect of gradings in initial public offers (IPO) in the future.



Government plans divestment in five PSUs via IPOs

Government is planning to list at least PSUs in the stock markets after a similar effort last year had to be shelved at the last moment when the stock markets tanked following the global financial meltdown.

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Part 3.2 MAJOR PLAYER OF IPO IN INDIA Some of the leading IPOs in India include Reliance Power Limited IPO, Tulsi Extrusions Limited IPO, Onmobile Global Limited IPO, EMAAR MGF IPO, Future Capital Holdings Limited IPO and many more. All these IPOs have opened their subscriptions in 2008. India has saved almost 3.3 billion proceeds in the global IPO market through eight deals which has made it the largest IPO market across the globe. Reliance Power IPO has been the biggest contributor in this regard The Initial Public Offering (IPO) is defined as the first set of stocks that are sold out by a company to the public in order to seek an expansion of the capital. The IPO is usually set up by the smaller or newly emerging companies but the largescale companies also go for it in order to become publicly traded. The issuer is faced with important considerations like the security of the issue, price band offered for the same and the time for sale. It is a risky affair for any individual investor as he or she does not have any clue regarding the performance of the shares on the first day of sale.

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Top Companies: An analysis Reliance Power IPO has been issued by Reliance Power Limited. Reliance Power IPO was issued on 15th January, 2008 and closed on 18th January, 2008. Reliance Power Limited Company is planning to generate capital worth Rs. 11, 700 crores through the IPO. This makes it the largest IPO in the country as on 17th January, 2008. The price band of the equity shares of Reliance Power IPO has been fixed at Rs. 405- 450 per equity share. The total size of Reliance Power IPO is around 26 crores equity shares. Reliance Power IPO will be listed on the National Stock Exchange (NSE) and also on the Bombay Stock Exchange (BSE). The lead bankers of Reliance Power IPO are Enam Securities, Kotak Mahindra Capital Co, ABN Amro Rothschild, ICICI Securities, JP Morgan Chase & Co, UBS AG and Deutsche Bank AG. The main objective of Reliance Power IPO is that the proceeds from the issue will be used to fund the power generation projects that the company plans to carry out.

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BGR Energy System (India) Ltd. was incorporated in 1985. BGR Energy System (India) Ltd. is engaged in the business of producing and selling different kinds of equipments, services and systems for power, refinery, gas & oil, and petrochemical industries .BGR Energy IPO was issued on 5th December, 2007 and closed on 12th December, 2007. The total size of BGR Energy IPO is 9,136,000 equity shares of Rs. 10 each. Out of the total number of equity shares around 500,000 has been reserved for the employees of the company and about 8,636,000 have been issued to the public. The price band of BGR Energy IPO has been fixed between Rs. 425 and Rs. 480. BGR Energy IPO was listed on the National Stock Exchange (NSE) and also on the Bombay Stock Exchange (BSE). The registrar of BGR Energy IPO was Intime Spectrum Registry Ltd. The lead managers of BGR Energy IPO were CLSA India, SBI Capital Markets, UBS Securities India, and Kotak Mahindra Capital. The minimum order quantity for BGR Energy IPO was fourteen shares. The maximum amount for subscription in BGR Energy IPO for the retail investor was Rs. 100,000.

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The Cinemax India IPO was launched in the year 2006, for the purpose of expanding the company and setting up theater screens in different locations. The Cinemax India IPO was launched with the purpose of utilizing the funds for meeting the requirements of the capital expenditure of establishing 19 new theater screens throughout the country, at an estimated cost of Rs 110.69 crores. The proceeds from the IPO would also be used for the general corporate purposes which include acquisitions.Cinemax India has filed its red herring prospectus with the Securities and Exchange Board of India (SEBI). Some the places where the Cinemax India is planning to set up theaters are Kolkata, Pune, Guwahati, Nasik, Panipat, Hyderabad, Ahmedabad, Siliguri, Bangalore, Indore, Nagpur, Faridabad, Ghaziabad, Ludhiana and Mumbai. Cinemax India is one of the leading exhibition theater chains in India. It is operating in several locations throughout the country. All together in the year 2006 it had 33 screens in 10 different locations. Cinemax India is a part of the Kanakia Group. In the year 2006, the total annual income was Rs 438.60 million and the net profit was Rs 67.64 million.

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ICICI Bank IPO was launched on June 18, 2007 a week after the opening of the DLF IPO. ICICI Bank raised Rs. 10,000 crores from investors from its Initial Public Offerings (IPO). ICICI Bank's domestic issue is part of a USD 5 billion capital raising program. ICICI IPO offered discount rates to its retail investors. The subscriptions of ICICI IPO closed on 22nd June 2007. One of the chief focuses of ICICI IPO was to generate interest among the retail investors keeping in view the prevailing market price of around Rs. 903. The ICICI Bank IPO has reportedly crossed the expected subscription amount by 10.5 times. The public offerings of the bank were subscribed by 11.5 times. ICICI Bank has planned up to elevate another USD 2.5 billion from the issue of American Depository Receipts. ICICI Bank has also decided to raise money by selling off the shares of its investment company for insurance business. This selling off of shares of the investment company of ICICI Bank will be cleared by RBI and IRDA. In 2007, ICICI Bank has got the approval from the Foreign Investment Promotion Board (FIPB) to sell up to 24 percent equity in the ICICI investment company. The international investors will be endowed with 5 percent equity from ICICI Bank. The bank has also decided for a shifting of its assets in other subsidiaries namely ICICI Prudential Life Insurance, ICICI Lombard General Insurance and ICICI Prudential Asset Management.

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Indian Bank was established on 15th August 1907 as a part of the Swadeshi Movement in India. Indian Bank IPO was issued in February 2007, almost 100 years after the bank was established. The issue of Indian Bank IPO was opened on 5th February, 2007 and closed on 9th February 2007. The size of the Initial Public Offering (IPO) of Indian Bank was 85,950,000 equity shares. It was done through 100 percent book building and had a face value of Rs.10. The retail segment was given 23,206,500. The price range varied from Rs.77 to Rs.91 and the tick size was Re.1. The minimum number of shares to be purchased was kept at 75. The retail investors were given the maximum subscription amount of Rs.100,000. The total size of Indian Bank IPO was estimated to be around Rs.782 crores.

Objectives of Indian Bank IPO • To fulfill the capital requirements for implementation of Base II standard. • To provide capital adequacy for it's loan and investment portfolio section. • To provide finance for developing business infrastructure. Indian Bank has more than 22,000 employees. The Indian Bank has 1411 branches spread all across the country. Indian Bank offers diversified banking services and has three subsidiary companies. The foreign branches of Indian Bank are set up in Singapore and Colombo

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Kingfisher till date has not launched any IPO, but has expressed its wish to launch one soon. This IPO would be used to fund its aggressive expansion plans in India. The accumulated corpus would be utilized to fund its airline business and to payoff debt for its acquired liquor company Shaw Wallace & Company. The brand Kingfisher is being owned by the business conglomerate United Breweries Group. The brand is being used for two business entities - Airlines and Alcoholic Beverage. The Airlines operates under the name of "Kingfisher Airlines" and the alcoholic beverage segment manufactures "Beer" and "Mineral Water" under the same brand name. Till now the company has not launched any IPO to fund its aggressive expansion plans, but plans to launch it in near future to raise capital. Dr Vijay Mallya is the Chairman and CEO of both the segments. The Chief of the United Breweries Holding Ltd (UBHL), Mr Vijay Mallaya, said that the group would come up with an Initial Public Offering in 2008 and would raise a total corpus of US$ 400 million. The Initial Public Offering of the Kingfisher Airlines would target a corpus of US$ 200 million and the rest would be raised through the IPO of the liquor business.Kingfisher Airline IPO, to be issued for the first time in the year 2008, to finance the airline's expansion and funding of A380s air fleet.

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KNR Constructions Ltd. IPO has been issued by the company in order to fulfill various objectives such as to meet the company's requirement for working capital and to purchase equipments.KNR Constructions Ltd. was incorporated in 1995 and the company is engaged in the business of infrastructure project development. The company provides services of construction, engineering and procurement for various sectors like irrigation, highways & roads, and management of the infrastructure of urban water. As on 30th June 2007, KNR Constructions Ltd. had around twenty four projects in the various states of India that included Assam, Tamil Nadu, Uttar Pradesh, Karnataka, Andhra Pradesh and Madhya Pradesh. The issue of KNR Constructions Ltd. IPO was opened on 24th January and closed on 29th January, 2008. The total number of shares issued by KNR Constructions Ltd for its KNR Constructions Ltd. IPO is 7,874,570 equity shares at the face value of about Rs. 10 each. The company plans to raise through KNR Constructions Ltd. IPO around Rs. 142 crores from the Indian capital market. KNR Constructions Ltd. IPO has been listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The lead manager of KNR Constructions Ltd. IPO is Axis Bank Limited. The registrar of KNR Constructions Ltd. IPO is Intime Spectrum Registry Limited.

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Manjushree Extrusions Ltd IPO was issued on 31st January, 2008 and it closed on 6th February, 2008. The various objectives of issuing Manjushree Extrusions Ltd IPO by the company were to use the proceeds to expand the operations of the company and also to meet the requirement of the working capital. The lead manager of Manjushree Extrusions Ltd IPO was Centrum Capital Limited. The registrar of Manjushree Extrusions Ltd IPO was Alpha Systems Private Limited and it was listed on the Bombay Stock Exchange (BSE). The total size of the equity share of Manjushree Extrusions Ltd IPO was around Rs. 23.07 crores. The face value of per equity share of Manjushree Extrusions Ltd IPO was Rs. 10. The maximum amount of subscription by the retail investor was around Rs. 100,000 in Manjushree Extrusions Ltd IPO. Manjushree Extrusions Ltd was incorporated on November 13th, 1987 and it is engaged in the production of plastic packaging items like containers and jars. Manjushree Extrusions Ltd manufactures products for multinational companies in various sectors like food processing, pharmaceutical, agrochemicals and FMCG. The net profit of Manjushree Extrusions Ltd came to Rs. 112.42 lacs in 2004- 2005. In 2005- 2006 this figure stood at Rs. 137.11 lacs and in the following year, 2006-2007, this figure increased to Rs. 282.32 lacs.

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The Maruti IPO has set a price range of Rs. 125 per share above the Floor price of Rs. 115. The subscription for Maruti IPO opened on June 12, 2003 and closed on June 19, 2003. The response to Maruti IPO was overwhelming within the subscription period, which led to an over-subscription of the public offerings of Maruti by more than ten times. The government decided to shell out 85 percent shares of IPO to the noninstitutional investors and 15 percent shares to the non-institutional high networth individuals. Consequently, government would get Rs.993 crores for 7.94 crores shares. But SEBI recommended that 60 percent can be given to the institutional investors but at least 40 percent should be allotted for the retail investors as well. The government has allotted 60 percent shares to the retail investors and 40 percent shares to the institutional investors. The shares were allotted to the individuals on a pro rata basis. The IPO of Maruti is claimed to be one of the biggest capital market transactions in recent years in India and also the largest Book Built IPO that has been implanted in India till date. Maruti IPO received more than 300,000 applications which is a record in the history of IPO in India. The majority of applicants to these comprise of the Indian retail investors. They received the allotments on the basis of the price range already fixed by the government. A huge number of institutional investors also paid a lot of importance in investing in Maruti.

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The subscription of Power Grid Corporation of India IPO was opened from 10th September 2007 to 13th September 2007. The price range of Power Grid Corporation of India IPO was between Rs. 44 and Rs. 52. The proceeds from Power Grid Corporation IPO were submitted to the National Investment Fund (NIF). Citigroup, Kotak and Enam were the lead managers for the Power Grid Corporation IPO. Karvy Computershare private limited was the registrar for the Power Grid Corporation IPO. In the year 2006, Power Grid Corporation of India Limited (PGCIL) reported a 28 percent jump in the net profit which amounted to Rs 1,009 crores. The company launched their IPO in 2007 and the subscription was opened from 10th September 2007 to 13th September 2007. The shares of the IPO of Power Grid Corporation of India had a price range of Rs. 44 to Rs. 52 per share. The funds raised from Power Grid Corporation IPO were submitted to the National Investment Fund (NIF). The lead managers of the IPO of Power Grid Corporation include Kotak, Citigroup and Enam. Power Grid Corporation of India (PGCIL) raised a capital of Rs 6,000 crores through the IPO. The proceeds from the IPO will be used to set up branches in almost 12 countries across the globe. A unit will be set up in China in order to provide consultancy services, accomplish several projects and operate transmission lines and grid network..

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The Reliance Petroleum IPO was launched by Reliance Petroleum Limited, the petrochemical segment

of

the

legendary

Indian

business

conglomerate, Reliance Industries Limited. The Mukesh Ambani led Reliance Petroleum Limited plans to expand its present petrochemical business. The price band for the Reliance Petroleum IPO was fixed between Rs 57 and Rs 62 per equity share and it raised Rs 6,000 crores. The main purpose of launching the Reliance Petroleum IPO was to fund its refinery project, which would be operational by the end of 2008. This refinery project of Reliance Petroleum would be an export oriented oil refinery in the special economic zone, annexed to its Jamnagar refinery in Gujarat. The said refinery would have a capacity of 580,000 barrels of crude oil per day. Further, it would also utilize a part of the accumulated fund for the setting-up of a polypropylene plant which would have a production capacity of 900,000 tons per annum. The Reliance Petroleum IPO was launched on 13th April 2006 and the bidding was closed on 20th April. The price band for the Reliance Petroleum IPO was fixed between Rs 57 and Rs 62 per equity share. This Initial Public Offering of the Reliance Petroleum raised Rs 6,000 crores. The Reliance Petroleum IPO issued 45 crores equity shares and raised Rs 2,790 crores at the upper end of the price band. The Reliance Petroleum IPO was very popular amongst retail investors, Petroleum IPO.

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Techpro Systems IPO will be issued by Techpro Systems (TSL) which is engaged in taking up turnkey projects in the systems of bulk material handling. The total size of the issue of Techpro Systems IPO will be around Rs. 250 crores approximately. Techpro Systems IPO will be launched by the company Techpro Systems (TSL) and the total size of the issue will be worth about Rs. 250 crores approximately. Techpro Systems (TSL) plans to enter the Indian capital market with its Techpro Systems IPO which will be a book built issue. Techpro Systems IPO will consist of 7,300,000 equity shares and it will comprise of around 22.33% of the paid- up post issue capital of Techpro Systems (TSL). The company has filed with SEBI its Draft Red Herring Prospectus in order to issue Techpro Systems IPO. The lead arrangers of Techpro Systems IPO are SBI and Kotak. Techpro Systems IPO is expected to be issued in the last week of January, 2008. Techpro Systems IPO will ensure that the company will have enough funds to take up developmental work and also to expand its operations. Techpro Systems (TSL) is engaged in undertaking projects of turnkey in systems bulk material handling that includes handling raw material systems for cement plants, power, and steel. Techpro Systems (TSL) manufactures various equipments like feeders, crushers, and screens and it also sets up conveyor systems.

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Chapter (4)

Page No. 74

MAJOR FINDINGS • It can be observed that out of 24 companies, only 10 companies have given positive returns on the date of listing. • Out of 24 companies observed, 9 companies have given positive returns for 1 month. • As far as 3 months & 6 months returns are concerned, 15 companies have given positive returns. • Only 10 companies were able to perform positive returns at the end of 1 year. • Market return indicates that, 11 companies had given positive return for 1 month. • months Market rate of return was positive for 21 companies. • Market return was positive for 6 months for all 24 companies. • For 1 year, all 24 companies were able to give positive returns. • Only 5 companies were able to give positive returns for all the periods. • If date of listing is concerned then, ICRA Ltd offered highest rate of return at 143.41%. • Highest rate of return was offered by ICRA Ltd. For one month and 3 months at 184.27% and 214.22%. • For 6 months and 1 year, Orbit Corporation Ltd. Gave highest return i.e. 464.41% and 289.41%.

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• S.D. was lowest for Oriental Trimex Limited at 2.14, 1.62, 2.55, 3.88 for all the periods indicating that it is less riskier than other. • S.D. was highest for Autoline Industries Limited at 56.7 indicating that it is the riskiest than any other security for 1 month. • For 3 months, Advanta India Limited has the highest S.D. at 93.44 • For 6 months, Orbit Corporation Limited was riskiest than any other scrip at 131.39 • For 1 year, Orbit Corporation Limited had highest S.D. at 225.71%. • Also, Orbit Corporation Limited has offered highest return for 6 month and 1 year.

Conclusion IPO is used by a company to raise its funds. The extra amount obtained from public may be invested in the development o f the company, although it costs a little to a company but it gives a way to get more money for long term investments.

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Chapter (5)

Page No. 77

 http://www.reliancemoney.com  http://en.wikipedia.org http://finance.indiamart.com/india_business_information/sebi_investors_kno  whow.html  http://www.hinduonnet.com/2003/03/26/stories/2003032604291800.htm http://demataccount.com/2008/01/15/learning-basic-concepts-of-ipo-india/  http://www.sebi.gov.in

Special Thanks to: Wikipedia, the free encyclopedia.htm  http://www.google.com  http://www.economywatch.com/business-and-financial/IPO-industry  http://www.fibre2fashion.com/IPO-article

 Grading of IPOs- The Hindu Business Line  Biggest IPO in India’s -Capital market History Business management article

Business News Newswire  Global_IPO_Trends_2007 -Report by Ernst & Young India  IPO, IPOs India News Market News - Economic Times

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